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BIR lifts tax audit suspension

By Prinz Magtulis (The Philippine Star) | Updated September 2, 2016 - 12:00am
 


 Under Revenue Memorandum Circular 91-2016, tax investigations authorized by the previous administration have been reinstated “to ensure the collection of correct taxes.” CC/Michal Jarmoluk

MANILA, Philippines - No existing tax audit has been scrapped as a result of a two-month suspension of tax investigations which the Bureau of Internal Revenue (BIR) lifted yesterday.

Under Revenue Memorandum Circular 91-2016, tax investigations authorized by the previous administration have been reinstated “to ensure the collection of correct taxes.”

“The suspension as ordered...is hereby lifted effective Sept. 1, 2016,” the circular dated Aug. 31 said.

“All field audits, field operations, or any form of business visitation in execution of (LOA)/electronic letters of authority/audit notices, letter notices or mission orders can already be conducted,” it added.

The Duterte administration suspended all existing LOA and its issuance upon taking over last July 1, saying it intends to check on the validity of the document issued when a probe is about to commence.

During the time, BIR commissioner Caesar Dulay said he received reports some investigations have taken years and have still not yet been concluded to the detriment of taxpayers.

Sought for comment, BIR assistant commissioner Marissa Cabreros said “there was no cancellation of these old LOAs.”

“But internal audit is ongoing and continuing and our revenue tax examiners with long outstanding and unreported LOAs are being asked to explain about the questionable delays...,” Cabreros said in a text message.

“Erring revenue tax examiners will be sanctioned,” she added.

The lifting comes after BIR recorded a one-percent dip in revenue collections last July, the first in seven months.

Revenues, however, were still up nine percent to P900.9 billion from January to July, data showed.

Under the circular, the agency recognized that there is a need for the bureau to have probing powers to effectively carry out its mandate of raising around 80 percent of state revenues.

“The conferred authority under the laws to the bureau for the collection of taxes, to be more effectively administered and effective, requires some of enforcement activities...,” it said.

But Benedict Tugonon, president of tax group Tax Management Association of the Philippines, said only “less than two percent” of BIR collections are being raised from audits.

This, he said, does not justify what he claimed was “harassment” being endured by taxpayers from “unscrupulous” examiners.

“If they have already attained that objective, then it’s good. If not, I hope there would be safeguards in place in favor of the taxpayer to avoid abuse,” Tugonon said in a phone interview.

Nonetheless, Tugonon said the 60-day suspension was already a “welcome development” since it looked like that taxpayers “could easily complain to the commissioner” under this new government.

Cabreros agreed. “Lifting of the ban will not give revenue tax examiners the opportunity to harass and continue their old practices because mechanisms has been set to discipline erring personnel,” she said.

“In fact, the (commissioner) is encouraging the public to report to BIR any corrupt activities, any hint or insinuation of the same,” the spokesperson said.
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KNOWING YOUR BIR REGULATIONS AND ISSUANCES

Revenue Regulations (RRs) are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes

Revenue Memorandum Orders (RMOs) are issuances that provide directives or instructions; prescribe guidelines; and outline processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing.

Revenue Memorandum Rulings (RMRs) are rulings, opinions and interpretations of the Commissioner of Internal Revenue with respect to the provisions of the Tax Code and other tax laws, as applied to a specific set of facts, with or without established precedents, and which the Commissioner may issue from time to time for the purpose of providing taxpayers guidance on the tax consequences in specific situations. BIR Rulings, therefore, cannot contravene duly issued RMRs; otherwise, the Rulings are null and void ab initio

Revenue Memorandum Circular (RMCs) are issuances that publish pertinent and applicable portions, as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices.

Revenue Bulletins (RB) refer to periodic issuances, notices and official announcements of the Commissioner of Internal Revenue that consolidate the Bureau of Internal Revenue's position on certain specific issues of law or administration in relation to the provisions of the Tax Code, relevant tax laws and other issuances for the guidance of the public.

BIR Rulings are official position of the Bureau to queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws.
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